Covid-19 cases spike: Markets likely to remain volatile in April; here's what analysts have to say

Concerns over rising Covid-19 cases have kept the market volatile during the past few days. In fact, the benchmark equity indices tanked over 1.50% on April 5 after Maharashtra announced lockdown-like restrictions across the state from 8 pm on Monday. On weekends, a complete lockdown will be imposed. The 30-share index Sensex traded 852 points down at 49,177 at around 2 pm (IST), while the 50-share Nifty index was down 228 points at 14,639.

Can we expect a deep cut in the market? Money9 spoke to various market experts to understand how D-Street may react behave in case of further spike in Covid-19 cases. Here’s what they had to say:

Binod Modi, Head Strategy, Reliance Securities

The steep fall in financials today can be attributed to increased apprehensions among investors from economic restrictions imposed in certain key states including Maharashtra. Banks, which started seeing steady improvement in asset quality and improvement in credit costs, may see further delay in credit cycle recovery and pressure in asset quality if business restrictions are imposed by more states due to a steep rise in Covi-19 cases.

Hemang Jani, Head Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services

Over the weekend, Covid-19 cases crossed the 1 lakh mark in the nation. Of this, around 80% of cases are in Maharashtra where the second lockdown has been put in place till April 30, though it’s not a complete lockdown. Market over the next few days would monitor as to how the situation pans out in Maharashtra and also in other states especially 8-10 other states where the covid cases is rising rampantly. Apart from this the Q4 numbers would start pouring in from mid-April. Thus, the month of April is likely to be highly volatile with Q4 earnings, rising covid cases and higher bond yields to determine the trend.

Gaurav Garg, Head of Research, CapitalVia Global Research

The increase in corona cases can give an opportunity to bears to make a strong grip on the market. We can expect a recovery in the Indian market as well. Nifty can be expected to be in the range of 14,350-14,900 in the coming week.

Gaurav Dua, SVP, Head-Capital Market Strategy, Sharekhan

Rising Covid cases does create uncertainty related to the pace of economic recovery and the impact of profitability of certain businesses. Thus, it could lead to higher volatility in the near term. However, we do not expect any big crash or turn in the market direction. We remain constructive on equities in the medium term.

Rusmik Oza, Executive Vice President, Head of Fundamental Research, Kotak Securities

Valuations on a one-year forward basis are expensive but reasonable on a two-year forward basis. We are not expecting any crash in Indian markets but a 10% correction is possible due to rich valuations and likely moderation in FPI flows. A 10% correction could be healthy for the market to form a stronger base for the next big up move. The sharper V-shaped economic recovery and strong earnings growth will act in favour of India. In the previous expansion phases, we have seen Indian equities outperforming even though bond yields kept on rising. Hence, higher growth could offset the negatives coming from higher bond yields. We can expect the broad range of Nifty-50 on a yearly basis to be between 13,000 and 16,000 as of now.